Without Pepsi, IPL may be without fizz; Value of title sponsorship may fall 30%

We hope the problems of IPL are short-term and they are addressed. But if they are not, we will have to go back and rethink, says Indra Nooyi.Ravi Teja Sharma, Ratna Bhushan&Shambhavi Anand | ET Bureau | Updated: October 10, 2015, 10:11 IST

The joint statement said BCCI and PepsiCo were in discussions to work out a solution which addressed the cola maker's concerns. "Both parties will share it when ready," it said. IPL has been in the centre of a major spot-fixing controversy and two franchisees have been suspended from the tournament after a Supreme Court-appointed panel found their owners to be guilty of malpractices.

A senior official at PepsiCo said the company is in discussions with BCCI on how these concerns around ethics can be addressed. "We are very clear that we do not want to be associated with a controversyridden sport. However, as of now there is no decision to terminate the contract with IPL two years ahead of term. Discussions with BCCI are still on," the official said. The company had paid Pepsi Rs 396.80 crore to bag the title sponsorship in 2013 for a fiveyear period which ends in 2017.

CLEAN SPORTING PROPERTIES

The official said PepsiCo was satisfied with the mileage it had derived from its association with the Twenty-20 tournament but Global Chairman Indra Nooyi has made it clear that the company will only associate with ethical and clean sporting properties. PepsiCo had earlier terminated its contract with ace golfer Tiger Woods following an infamous sex scandal.

The cola maker can scrap its sponsorship if circumstances sullied the sporting event's reputation or the brand image of the sponsor because of its IPL association. However, this needs to be proved by the sponsor. Otherwise, the cricket board has the option of dragging the company to court.

In its statement, BCCI said it has assured PepsiCo that steps would be taken to address the concerns and it will work towards necessary solutions in the interests of the league as well as the company. Media planners and experts say that if a solution is not found and PepsiCo does indeed exit ahead of its term, it could push down pricing of IPL title sponsorship by as much as 30%.

"Prices of the IPL title sponsorship will go down by 25-30% (that) is my estimate. That's because of two reasons. The new sponsor will have to wipe out the very strong association PepsiCo had with IPL for three years. Besides, the new title sponsor will have only two years to leverage IPL," said Sam Balsara, chairman at media buying group Madison.

ECOMM COMPANIES MAY STEP IN

Ecommerce companies such as Paytm and Snapdeal could look at picking up the title sponsorship if Pepsi ends its deal. Shankar Nath, senior vice-president at Paytm, which is already the title sponsor for all international cricket matches to be played in India till 2019, said the company would evaluate the opportunity once there was more clarity after BCCI's meeting on October 18. "IPL is a good, stable property," he said. A top Snapdeal official, who did not wish to be named, said the company may consider the sponsorship option as IPL was still an interesting asset.

Ashish Bhasin, chairman & CEO, South Asia, at Dentsu Aegis Network, said it won't be difficult to find sponsors. "It's more about the pricing. Going forward pricing of title sponsorship and also of other sponsorship and TV spots will depend on how the controversy around IPL is managed. The impact will get magnified if the controversy doesn't end quickly," he said. But Shailendra Singh, joint managing director at entertainment and sports marketing firm Percept, said no one in BCCI had made any effort to rebuild the IPL brand and no company would want to risk its image by getting involved with the tournament.

COS MAY BE LOOKING AT A QUICK HIT

Companies willing to take an exposure to IPL could be the new ecommerce players looking for a quick hit to establish themselves, and the fact that it would possibly be for a shorter duration of only two years would help. IPL was hit by the spot-fixing and betting scandal in 2013, the first year of Pepsi's association with the tournament. At that time, Delhi Police had arrested three players — S Sreesanth, Ashok Chandila and Ankeet Chavan — on charges of alleged spot fixing. Later, Gurunath Meiyappan, the son-in-law of then BCCI president N Srinivasan, was also arrested along with Bollywood actor Vindu Dara Singh for their alleged involvement in betting.

Sachin Bansal, Binny Bansal, sales director Hari, accounts managers Sumit Anand and Sharauque among other employees have been named in the FIR registered on the basis of a complaint lodged by Naveen Kumar, owner of Indiranagar-based C-Store Company.